5 Steps to Navigating Your Toughest Prospects
It’s downright dangerous for small companies, and especially start-ups, to deal with the corporate giants who dominate so many industries. They’re the pachyderms; we’re the plant life.
Like elephants, these companies have great memories and recall of how the world was, but no imaginations to see the world that will be.
Entrepreneurs with great ideas and enormous energy--but limited time, resources and access--face a number of challenges in dealing with elephants. Here are five stumbling blocks that you need to avoid at all costs.
1. Right Church - Wrong Pew
It’s easy to get lost or misdirected when you’re wandering through the wastelands of large companies. Too often people with new ideas get steered to the folks working in new media, innovation, or digital, and are quickly forgotten. The people who typically populate these departments are long on enthusiasm but short on cash and the ability to greenlight anything.
Big firms have many different pockets of serious money. If you spin your story correctly, you can often tap into well-funded community programs, marketing initiatives, charitable commitments or even diversity programs. Don’t be shy about asking - sometimes success is simply putting a new cover an old book.
2. Right Pew - Wrong Seat
Even if you’re in the right place with the right story, your proposal still needs to “fit” the customer’s interest and appetite. You need to understand the required size, scale and impact that’s needed to impress the client and his or her bosses, and to move the needle for them. Otherwise, you’ll just have been wasting a lot of time and energy.
Even results that are hugely significant and encouraging to an entrepreneur just won’t matter if you’re talking hundreds of users and they’re talking millions. I’ve seen major retailers do this over and over - they’ll run almost any credible pilot project for a new service or product, but in the end, they won’t pull the trigger if your metrics don’t match theirs.
And because big companies tend not to run out of cash, they are often more than happy to keep mediocre projects running for way too long - even though they may have mentally checked out some time ago.
3. Right Seat - Wrong Guy
Another risk in dealing with big businesses is that the guy sitting across from you might not be the one who can ultimately say “yes.” There are hundreds of people in these places who can say “no,” but you’ve got to get in front of the ones who can say “yes” and write a check to boot.
4. Right Guy - Wrong Time
I’m always amazed at how many entrepreneurs don’t do the homework necessary to understand the budget and buying cycles of their target customers. These things are set in concrete. And bad timing can be the quickest deal killer of all. Plus, if you show up at the wrong time, it’s pretty obvious to the customer that you don’t know much about their business, their calendars or their requirements. Don’t make this amateur mistake.
There is one exception to this rule, and it depends entirely on your relationship with your buyer. It is possible that, on occasion, you will tumble into an Alice in Wonderland scenario where the buyer lets you know that, instead of their budgeted funds being totally spent, they have excess funds which they need to spend in order to avoid having their budget cut the next year. Take the money and run.
5. Right Time - Wrong Pitch
Sometimes your best bet is not to sell at all, but to focus on helping the customer understand the larger competitive dynamics of the marketplace. Many market resources and opportunities are scarce. Letting the big guys know that there are other major players who are about to shut them out is a very effective motivator.
One of my favorite examples involves what I call cross-industry blocking alliances. This is when major players in different vertical markets team up in a competitive game of musical chairs. The last company to find a chair (a partner) loses out big. American Express, one of the great marketers of all time, was an early victim of this strategy. It cost the company millions of cardholders and billions of dollars.
In the early days of frequent flyer programs, a very smart guy at American Airlines determined that miles could be used as an incentive not simply for flying, but for many other things, like car rentals and credit card purchases, as well. American quickly and quietly partnered with MasterCard. United partnered with Visa. That left American Express out in the cold without an airline partner that was both credible and widely available for business travelers. In the next several years, while Amex topped out at about 9 million cardholders, Visa blew right by them and grew to almost 30 million cardholders.
HOWARD TULLMAN | Columnist
Howard Tullman is the CEO of 1871 in Chicago where, at the moment, 260 digital startups are building their businesses every day. He is also the general managing partner of G2T3V, LLC and Chicago High Tech Investors – both early-stage venture funds; a member of Mayor Emanuel’s ChicagoNEXT Innovation Council; and Governor Quinn’s Illinois Innovation Council. He is an adviser to many technology businesses and an adjunct professor at the Kellogg Graduate School of Management. @tullman